Japan’s new cryptocurrency exchange license has already received 18 applications including 10 from new operators.
The UK’s financial regulator, the Financial Conduct Authority (FCA), has announced the second cohort of its fintech sandbox on June 15. Out of the 24 startups joining this year’s cohort, nine are developing solutions using blockchain technology, which is a testament to the potential that the FCA sees for this new technology to play a major role in the financial services sector of the future.
The FCA’s fintech sandbox allows startups to trial new financial products and services without “incurring the normal regulatory consequences.” The idea behind the fintech sandbox is to boost technological innovation as well as competition in the UK’s financial industry.
The FCA’s Executive Director of Strategy and Competition, Christopher Woolard, stated that the fintech sandbox is growing in popularity as more firms applied for this year’s cohort than for the one in the previous year.
“It is particularly encouraging that both the number of firms applying and accepted for testing has increased in cohort two. That means more innovative firms, trialing more innovative propositions to bring to the market. This is an important part of the FCA’s commitment to promoting innovation and competition in the markets we regulate,” Woolard stated.
77 submissions were received for this year’s cohort of which 31 applicants met the eligibility requirements. Out of the 31 eligible fintech startups, the 24 chosen ones were accepted into the fintech sandbox as they are ready for testing. Now that the second cohort has been finalized, the startups will start testing their new products and services shortly on a small-scale and short-term basis to safeguard consumers while still having enough leeway for innovation to thrive.
The selection of startups is very diverse. The sectors covered by the participating fintech startups include insurance, payments, retail banking, and lending, among others, while new technologies involved include artificial
Bitcoin reached a new all-time high in June when it inched close to the $3,000 mark after an impressive six-month rally that saw the cryptocurrency triple in value. Unsurprisingly, bitcoin has been all over the media in the past few months as global adoption and the demand is increasing. However, adoption rates are faster in some countries, such as Japan, China, and India than others. One of the countries where bitcoin adoption is slower than expected is New Zealand.
According to a report by local news publication, bitcoin adoption has been slow in New Zealand because it is not that easy to actually buy bitcoin locally using the New Zealand dollar. Bitcoin buying options for New Zealanders are effectively limited to peer-to-peer exchanges such as LocalBitcoins and Paxful, where buy prices usually come with a high premium and the country only has a handful of local exchanges, such as NZBCX and Cryptopia.
There is also the bitcoin exchange Coined, which allows users to buy the cryptocurrency using online bank deposits but on its website, it states, “The [bitcoin order] queue has been full for six days, five hours. Coined’s current bitcoin reserves have been depleted due to high demand. Use the form below to receive notification when your order can be placed.” Also, according to news publication Stuff, there is a bitcoin ATM in an Auckland bar that has not really attracted many users.
The reason for the limited buying options in New Zealand is the challenges that both bitcoin startups and individual bitcoiners are facing when dealing with local banks. Unfortunately, this is not a new phenomenon in the Bitcoin economy and has also been a prevalent issue in the United Kingdom where banks have closed bank accounts of users who have purchased bitcoin using bank transfers and have
Most cryptocurrency users are well aware of what the PBoC aims to achieve. More specifically, the financial institution is looking to issue a national digital currency. It appears this plan will not come to fruition soon, though. What is worrisome is how a promotion of a fake PBOC-based digital currency gains a lot of momentum right now. These products are not authorized by the People’s Bank of China by any means.
Big projects often get copied by people with criminal intent. This is especially true when banks or governments are involved. A new project claims a digital currency backed by the PBoC is being issued right now. That is anything but the case, as the institution has no plans to do so anytime soon. However, this scam claims investors can buy digital currency right now. The People’s Bank of China has issued a nationwide warning about this fake project already.
PBoC Is not Backing Any Digital Currency Projects
The People’s Bank of China has not yet issued a digital currency. Nor have they authorized any institution to do so. One particular unnamed currency claims to have the support of the PBoC, which is not the case. It is evident this is a scheme to defraud potential investors. It is unclear who is behind this fake project, though. Anyone who comes across this project needs to avoid it and report it to the appropriate parties.
It is evident the Chinese market is awaiting Bitcoin regulation. Until this regulation goes into effect, projects like this will pop up left, right, and center. Bitcoin and outcomes are gaining a lot of popularity right now. It only makes sense for China to issue its own digital currency moving forward. It is unclear when this will happen, though. For now, the institution has not commented
Due to bitcoin’s pseudo-anonymous nature, which makes it difficult to link transactions to the individuals conducting them, bitcoin has become the new go-to ransom payment method in ransomware attacks. This development has led cybersecurity firms to buy and store bitcoin in case their clients decide to pay the ransom. However, regulations are making it increasingly difficult for cybersecurity specialists to provide this service.
Leading exchange and wallet provider Coinbase has reportedly shut down the bitcoin account of cybersecurity specialist and founder of Night Lion Security Vinny Troia. Coinbase contacted Troia at the end of last year to inquire what the purpose behind his bitcoin holdings are. When Troia informed Coinbase that it was to buy and store bitcoin on behalf of clients who may potentially want to use them to pay for ransoms during ransomware attacks, his account was suspended and he was no longer able to set up a new account under his name or those of family members.
The issue with holding funds that may be used to pay criminals is that it could get regulated firms such as Coinbase in trouble with the financial regulator as well as the law, as this may be deemed as a breach of anti-money laundering (AML) laws. Given the increased scrutiny on bitcoin businesses by regulators, it should not come as a surprise that bitcoin exchanges would rather not see their platform be used to facilitate ransom payments, despite the well-meaning intent of these payments.
On the other hand, making it more difficult for cybersecurity firms to buy and store bitcoin could easily lead to more large-scale disruptions through ransomware attacks such as the global WannaCry ransomware attack that took place in May. In some cases, it is easier for companies to simply pay the ransom to regain access to their
A look at how major cities in the US and their stance on Bitcoin regulation
On June 6, the Tel Aviv district court announced its official ruling on the dispute between Israeli bitcoin exchange Bits of Gold and the country’s second largest financial institution Bank Leumi. The court ruled in favor of Bank Leumi, dismissing the case of Bits of Gold and the denial of banking services for bitcoin startups and service providers in the region.
According to Finance Magnates that obtained the court documents, Bank Leumi told the Tel Aviv district court that the financial institution could no longer provide banking services to bitcoin exchange Bits of Gold due to the country’s strict Anti-Money Laundering (AML) policies. Representatives of Bank Leumi stated that cryptocurrencies are difficult to control under the AML systems of Israel and because of that, the bank itself cannot follow AML requirements set by the government if it continues to provide services to cryptocurrency service providers.
Although Bank Leumi acknowledged the fact Bits of Gold had established efficient and complete KYC systems to remain fully compliant with AML requirements imposed by local financial regulations, the representatives of Bank Leumi claimed that KYC systems cannot be utilized to unravel the end receiver of a transaction.
Similar to the statement the US Securities and Exchange Commission (SEC) issued to the public in regard to the rejection of the Winklevoss twins’ bitcoin ETF COIN, Bank Leumi emphasized that the major factor that convinced the bank to reject Bits of Gold was the lack of regulation in overseas bitcoin and cryptocurrency markets.
Ever since the popularization and global adoption of bitcoin as digital gold, a settlement network, and a digital currency, certain banks have continued to deny providing services to companies that deal with cryptocurrencies. Startups in the UK and Australia greatly suffered from the denial of banking services throughout 2014 to 2016 before the
Connecticut-based companies, GAW Miners and ZenMiner, have been ordered by the U.S. District Court for the District of Connecticut to pay $10 million each as fines for their fraudulent activities.
The two companies were fronted by Homero Joshua Garza but ceased their operations when accusations leveled against them reached a crescendo. Both GAW Miners and ZenMiner operated as bitcoin cloud mining schemes that sold shares in cloud mining contracts to investors. These shares allowed investors to have a proportionate claim to the gains made through the company’s apparent bitcoin mining activities.
Between August and December 2014, the companies sold $20 million worth of shares, which were called Hashlets to over 10,000 investors. However, a large number of complaints from the public prompted the Securities and Exchange Commission (SEC) to investigate the firms. This culminated in the SEC filing a complaint against the Garza and the two firms in December 2015.
The SEC revealed that the two firms simply did not have enough computing power to generate the mining returns they claimed to achieve. Paul G. Levenson, Director of the SEC’s Boston Regional Office stated “As alleged in our complaint, Garza and his companies cloaked their scheme in technological sophistication and jargon, but the fraud was simple at its core: they sold what they did not own, misrepresented what they were selling, and robbed one investor to pay another.”
In typical Ponzi scheme fashion, Garza was using what he made from new investors to pay off old investors, as opposed to actually mining bitcoin and paying out a share of the profit it investors. Naturally, this fraudulent business model was unsustainable and eventually the scheme fell apart. Most victims of the two schemes did not get their initial investment back or realize any profits from their “cloud mining” contracts. The SEC
The European Union (EU) has announced the creation of an international consortium that seeks to diminish the use of cryptocurrencies and the dark web by criminals. As evidenced in the recent WannaCry attack, criminals use the pseudo-anonymity provided by bitcoin to their advantage. This project aims to find ways to stop the use of cryptocurrencies as a means to evade the law while still respecting the right to privacy of non-criminal users.
The consortium is composed of fifteen members from seven European countries and is funded by the European Union. The consortium is named TITANIUM, which stands for Tools for the Investigation of Transactions in Underground Markets. The €5 million research project is slated to operate for three years and aims to develop workable scientific solutions towards the challenges of curtailing and investigating criminal activities such as terrorism, fraud, money laundering, and extortion, connected with the use of digital currencies and the dark web.
According to the press release, TITANIUM, “aims to develop and implement tools to reveal common characteristics of criminal transactions, detect anomalies in their usage, and identify money-laundering techniques.”
In addition, the researchers will test the efficacy of their solutions on the premises of the participating Law Enforcement Agencies. Once these solutions have been deemed sufficient to mitigate the problem, the consortium will “conduct training activities in order to develop skills and knowledge among EU law enforcement agencies.”
Project co-ordinator Ross King, senior scientist at the AIT Austrian Institute of Technology GmbH, stated, “Criminal and terrorist activities related to virtual currencies and darknet markets evolve quickly and vary in technical sophistication, resilience and intended targets.”
Therefore, to match the speed at which digital currencies and the dark web evolve, the consortium will employ varied methods of information gathering such as virtual currency ledgers, online forums, peer-to-peer networks
US Judges uphold Ross Ulbricht’s life sentence Reuters reported on May 31, as the self-confessed mastermind of the infamous Silk Road deep web marketplace lost an appeal to overturn his conviction.
On May 31, 2017, the Court of Appeals in New York rejected the appeal, where Ulbricht’s lawyers argued that their client was not given a fair trial due to the failure consider evidence of corruption by two federal agents involved in the Silk Road investigation, both of whom seem to have been treated in parallel to Ulbricht’s case.
In December 2015, former U.S. Secret Service and Silk Road Task Force agent Shaun Bridges was sentenced 71 months in jail for money laundering, obstruction of justice and fraud. Drug Enforcement Administration agent Carl Force also pleaded guilty to money laundering relating to stolen bitcoin from the site and received a prison sentence.
33-year-old Ulbricht now faces life behind bars and will not be eligible for parole; while he admitted to creating Silk Road in 2011, he has denied allegations of operating the site, which was run by a pseudonym known as Dread Pirate Roberts (DPR). Both law enforcement agents Bridges and Force infiltrated the site posing as administrators and drug dealers on the site, where Force created numerous accounts outside of his mandate, blackmailing and selling Dread Pirate Roberts supposed information of the US government investigation of Silk Road for personal gain in the form of bitcoin.
Silk Road, Deaths, and Drama
In February 2015, Ulbricht was found guilty of helping to enable drug sales using bitcoin. Prosecutors also pointed to six deaths related to the Silk Road website at the time, as a result of overdose. Ulbricht argued that overall the net impact was positive since there was a ‘cream of the crop’ effect with the feedback